The European Commission has presented the REPowerEU Plan, its response to the hardships and global energy market disruption caused by Russia’s invasion of Ukraine.
According to the EU, there is a double urgency to transform Europe’s energy system: ending the EU’s dependence on Russian fossil fuels, which are used as an economic and political weapon and cost European taxpayers nearly €100 billion per year, and tackling the climate crisis.
Diversifying supplies
The EU has been working with international partners to diversify supplies for several months, and has secured record levels of LNG imports and higher pipeline gas deliveries. The newly created EU Energy Platform, supported by regional task forces, will enable voluntary common purchases of gas, LNG and hydrogen by pooling demand, optimising infrastructure use and coordinating outreach to suppliers.
As a next step, and replicating the ambition of the common vaccine purchasing programme, the Commission will consider the development of a ‘joint purchasing mechanism’ which will negotiate and contract gas purchases on behalf of participating Member States.
The Commission will also consider legislative measures to require diversification of gas supply over time by Member States. The Platform will also enable joint purchasing of renewable hydrogen.
In the Mediterranean and North Sea, major hydrogen corridors will be developed. In the face of Russia’s aggression, the EU will support Ukraine, Moldova, the Western Balkans and Eastern Partnership countries, as well as the most vulnerable partners.
Accelerating the rollout of renewables
A massive scaling-up and speeding-up of renewable energy in power generation, industry, buildings and transport will accelerate our independence, give a boost to the green transition, and reduce prices over time. The Commission proposes to increase the headline 2030 target for renewables from 40% to 45% under the Fit for 55 package. Setting this overall increased ambition will create the framework for other initiatives, including:
- A dedicated EU Solar Strategy to double solar photovoltaic capacity by 2025 and install 600GW by 2030.
- A Solar Rooftop Initiative with a phased-in legal obligation to install solar panels on new public and commercial buildings and new residential buildings.
- Doubling of the rate of deployment of heat pumps, and measures to integrate geothermal and solar thermal energy in modernised district and communal heating systems.
- A Commission Recommendation to tackle slow and complex permitting for major renewable projects, and a targeted amendment to the Renewable Energy Directive to recognise renewable energy as an overriding public interest. Dedicated ‘go-to’ areas for renewables should be put in place by Member States with shortened and simplified permitting processes in areas with lower environmental risks.
- Setting a target of 10 million tonnes of domestic renewable hydrogen production and 10 million tonnes of imports by 2030, to replace natural gas, coal and oil in hard-to-decarbonise industries and transport sectors. To accelerate the hydrogen market increased sub-targets for specific sectors would need to be agreed by the co-legislators. The Commission is also publishing two Delegated Acts on the definition and production of renewable hydrogen to ensure that production leads to net decarbonisation. To accelerate hydrogen projects, additional funding of €200 million is set aside for research, and the Commission commits to complete the assessment of the first Important Projects of Common European Interest by the summer.
- A Biomethane Action Plan sets out tools including a new biomethane industrial partnership and financial incentives to increase production to 35bcm by 2030, including through the Common Agricultural Policy.
Reducing fossil fuel consumption in industry and transport
Replacing coal, oil and natural gas in industrial processes will reduce greenhouse gas emissions and strengthen security and competitiveness. Energy savings, efficiency, fuel substitution, electrification, and an enhanced uptake of renewable hydrogen, biogas and biomethane by industry could save up to 35 bcm of natural gas by 2030 on top of what is foreseen under the Fit for 55 proposals.
The Commission will roll out carbon contracts for difference to support the uptake of green hydrogen by industry and specific financing for REPowerEU under the Innovation Fund, using emission trading revenues to further support the switch away from Russian fossil fuel dependencies.
The Commission is also giving guidance on renewable energy and power purchase agreements and will provide a technical advisory facility with the European Investment Bank. To maintain and regain technological and industrial leadership in areas such as solar and hydrogen, and to support the workforce, the Commission proposes to establish an EU Solar Industry Alliance and a large-scale skills partnership. The Commission will also intensify work on the supply of critical raw materials and prepare a legislative proposal.
Smart Investment
Delivering the REPowerEU objectives requires an additional investment of €210 billion between now and 2027. Cutting Russian fossil fuel imports can also save us almost €100 billion per year. These investments must be met by the private and public sector, and at the national, cross-border and EU level.
To support REPowerEU, €225 billion is already available in loans under the RRF. The Commission adopted legislation and guidance to Member States on how to modify and complement their RRPs in the context of REPowerEU.
In addition, the Commission proposes to increase the RRF financial envelope with €20 billion in grants from the sale of EU Emission Trading System allowances currently held in the Market Stability Reserve, to be auctioned in a way that does not disrupt the market. As such, the ETS not only reduces emissions and the use of fossil fuels, it also raises the necessary funds to achieve energy independence.
Under the current MFF, cohesion policy will already support decarbonisation and green transition projects with up to €100 billion by investing in renewable energy, hydrogen and infrastructure. An additional €26.9 billion from cohesion funds could be made available in voluntary transfers to the RRF. A further €7.5 billion from the Common Agricultural Policy is also made available through voluntary transfers to the RRF. The Commission will double the funding available for the 2022 Large Scale Call of the Innovation Fund this autumn to around €3 billion.
